The 21st century is the century of technology which is changing every minute and so the technology is being outdated every minute by its replacement. The technological advances supersede the existing product types and forms and so the product life cycle of many products are moving ever faster. This has been a big challenge for the marketing. This development has created the pressure on the marketing to capitalise on and exploit the business opportunities brought by this new technology and organisations are forced to adapt this new technology to survive.
Ref: Andrew Orgill 2004.
Branding.
Before discussing the case study it is ideal to talk about the branding issues as the main intention of the management over here has been to maintain the brand name. A brand is not an identity. It has always been experience. A brand is built from a variety of different experience. Brand makes a promise and must fulfil that promise. Brands are conceptual and emotional and strong brand are often more like religion.
The successful European companies share one critical characteristic in addition to their reliance on alternative media: senior managers drive the brand building. They actively make brand building part of their strategic plans and as a result integrate their alternative approaches to brand building into their overall concept of the brand. Founder and CEO of Body Shop, Anita Roddick, who believe that advertising is wasteful, has made her alternative brand-building methods on the basis of her company’s strategy. A clear and effective brand identity, one for which there is understanding and buy-in throughout the organisation, should be linked to the business’s vision and its organisational culture and values. When a clear and strong brand identity is lacking, a brand is like a ship without a rudder.
Building brand exposure creates visibility. Simple recognition can affect perceptions: people tend to like known brands even if they have never used them. Brand visibility can signal leadership, success, quality, substance and even excitement and energy- all before the products come into play. So Building a brand is quite important in a business. But to make the brand name, the product only is not sufficient. One has got to identify the brand attributes. To develop brand strategy it is ideal to identify the key media types, key audience message, develop brand voice, identify the key features of the product or company.
To launch a brand name one has to launch new identity in all media, possibly including advertising, release announcements and descriptions to press, cross-media advertising and promotion. Similarly building an infrastructure is needed to manage the brand and always measure the brand performance. Sponsorship is quite an effective tool for brand popularity. Hugo Boss, a fine clothier created its image of exclusivity and high quality in large part through effective use of sponsorship. In the early 1970’s it sponsored Porsche in Formula One races to capitalise on Porsche’s strong exclusive image and international presence. Before this sponsorship the annual revenue of the company was 4million Deutsche marks but it topped 100million DM in the early 1980s and it increased to 10 fold in the mid 1980s.
Brand Versus Private Labels.
Today there are a lot of private label “store brand” goods in the market than before. This has become a threat to the brand manufactures. But the manufacturers have overreacted to this situation without recognizing two salient features as to why this has happened. First the private label strength generally varies with economic conditions. When the economy is suffering the private label market share goes up and goes down in the stronger economic periods. For example, the success story of Classic Cola, a private label made by Cott Corporation for J. Sainsbury’s supermarkets in the UK? Classic Cola was launched in April 1994 at a price 28% cheaper than Coca-cola. Today the private label accounts for 65% of total cola sales through Sainsbury’s and for 15% of the UK coal market
European Supermarkets success with private labels.
In the European supermarkets, higher private label sales result in higher average pre-tax profits. European grocery store such as Sainsbury’s has 54% of its sales coming from private-labels and similarly tesco has its 41%.
Brand Strength
Once there is a threats doesn’t mean that the national brands should be abandoned. Indeed brand is alive and reasonably healthy. It just requires only dedicated management to thrive. These points will explain more.
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The purchase process favours brand-name products: Consumers still require assurance of quality when they do not have the time, opportunity or ability to inspect alternative at the point of sale and this is the prime reason for the existence of the brand names. A survey made in the 1994 suggests that 60% of consumers still agree that they prefer the comfort, security, and value of a national brand over a private label.
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Brand-name goods have a solid foundation on which to build current advantage: Brands have a running start. The strongest national brands have built their consumer equities over decades of advertising and through delivery of consistent quality. This gives them the advantage over the new private label products.
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National brands have value for retailers: It is impossible for the retailers to cast off national brands that consumers expect to find widely distributed. If a store doesn’t carry a popular brand then consumers are put off and often switch off the store. This is why retails must not only stock but also promote, often at a loss, the popular national brands.
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Excessive emphasis on private labels dilutes their strength: There is a common belief in the consumers that a store cannot provide the same excellent quality for products as the brand name. This is why stocking up products only of private label will affect the business. This is what has happened with Sainsbury’s in the last few years and they are doing worse.
Winning Strategies for Brand.
1.Invest in Brand equities: According to James Burke, a former CEO of Johnson and Johnson, a brand is a capitalized value of the trust between a company and its customer. Brand equity- the added value that a brand name gives to the underlying product- must be carefully nurtured by the mangers and managers should also monitor how the consumers perceive the brand. Consistent investment in product improvements enhances a brand’s perceived superiority, provides the basis for informative and provocative advertising, increases the brand’s sustainable price premium over the competition, and raises the costs to private-label imitators who are constantly forced to play catch-up.
2. Innovate wisely: It has been noticed that lots of products are being launched just to increase the range but this will be a problem because the available range confuses the consumers and also increases the cost of production. This will not help to increase the brand strength but will make it weaker. So it is ideal to innovate wisely.
3. Build trade relationships: The best consumer goods companies should know more about their consumers than any private label manufacturer. This will help to build trade relationships
4. Mange the price spread: Manufacturer must monitor the price gap both to the distributor and to the end consumer between each national brand and the other brands, including the private label in the market. They should also measure the price elasticity for the branded product.
5.Exploit sales-promotion tactics: The manufactures cannot prevent retailers from displaying copycat private label products alongside their brands with compare and save signs heralding the price gaps. But they can use the sales promotion tactics like giving trade discount to the retailers, advertising campaign and rewards to the retailers for the sales volume. Similarly they can distribute coupons to households where retailers are aggressively providing private label products
Ref: Harvard Business Review On Brand Management, Harvard Business School Press, 1999, US
Setting Up Customer Database System.
Database is a collection of data arranged for ease and speed of search and retrieval. It is also called data bank. A database management system (DBMS) is a (or more typically, a suite of them) designed to manage a a large set of structured , and run operations on the data requested by numerous users.
Today most of the organisations are continuously using the database to manage customer relationships to increase both sales and customer satisfaction because a database help one identify key trends and important information such as their most and least profitable customers. This is often called Customer Relationship Management (CRM), and it plays an important role in many business' sales and marketing strategies
Customer Relationship Management (CRM): Customers are the key of the business regardless of the size of the industry and successful business build their reputation on long term relationship with their satisfied customers. CRM is an integrated approach to identifying, acquiring, and retaining customers. CRM helps organisation to maximise the value of every customer interaction and drive superior corporate performance By enabling them to manage and coordinate customer interactions across multiple channels, departments, lines of business, and geographies. CRM make customers feel that they are dealing with a single, unified organization that recognizes them at every touch point.
http://www.siebel.com/what-is-crm/software-solutions.shtm
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Excellent customer service is about being aware of the customer needs and reacting to them effectively. CRM helps a business to understand, anticipate and respond to the customers needs in a very consistent way right. CRM can:
- Develop better communication channels
- Collect vital data, like customer details and order histories
- Create detailed profiles such as customer preferences
- Deliver instant, company-wide access to customer histories
- Identify new selling opportunities
Benefits of Database Marketing and CRM:
The benefits of this are:
- It helps to increase the sales to new and existing customers through better timing, identifying needs more effectively and cross-selling of other products
- It also helps in effective marketing communications, through a more personal approach and the development of new/improved products/services
- It helps to enhance customer satisfaction and hence customer retention
- It helps to increase value from your existing customers.
Effective marketing databases and CRM enables a business to analyse the data they hold and to find out their important customers and the characteristics they share. It also helps to a business to communicate with their customers by identifying similar groups so that they can be targeted by a particular method. For example the group preferring telephone, direct mail, email or face to face marketing. This will help business to maintain their customers through promotional offers and also to target the group from whom there have been no business. Similarly it helps to measure the effectiveness and efficiency of marketing ( reducing the marketing from the people who don’t respond to promotional campaign).
Setting Up A Database System.
There are lots of issues that should be concerned before setting up a database system or CRM. One will need to estimate the likely scale of the system, will have to strike the balance between the requirement and the available budget and will have to consider the need or the benefit of integration with other company system.
There are a number of ways of setting up a database system. One can use a simple software package system such as Microsoft access which could just fit in the current computer system being used by the company. Similarly one can buy off-the-shelf software provided from Oracle, Microsoft, SAP etc. Similarly the large or complex business can go for bespoke software where consultants and software specialists customize or design a software solution and integrate it with the existing software or the website.
Similarly a business can have a managed CRM solution where a business buy the use of the software from other companies for a period of time. This sort of service provider are called Application Service Provider ( ASP).
Developing a Database.
A good marketing database not only includes the existing customers but also the prospective customers. So even the people enquiring about the company’s products should be included in the database. Similarly the marketing should be focused on the parties interested and not the total population. While making the database the profile of the customers should be created and they should be grouped according to their different requirements as this will give the idea of how likely they are to purchase what is being offered. Once customer profile is created the business should consider looking for additional prospects from outside "lists". Lists of potential customers are held by brokers whose names you can find in local or marketing directories.
Databases should include the following:
- contact information, example company name, address, telephone and fax numbers, and names and job titles of relevant contacts
- what has been bought , when, and from which salesperson - so that one can identify what they seem most likely to buy and then plan your sales and marketing efforts
- their service history and any complaints
- their account history, to assess whether they pay on time, and how profitable they have been - some customers may not actually be very profitable
When compiling information, one should fully comply with legal requirements, particularly those of the Data Protection Act 1998.
It is suggested that the Allwarm should go for the database management for its end customers as it is very essential in today’s competitive market. It might be a bit expensive but will be true worthy in the long run.
Direct Marketing.
Direct marketing is a proactive system of marketing where organisations tend to market goods and services directly to the customers rather than waiting for them at the store. This direct marketing concept came quite early in the 1900 when Kleeneze and the Amway started selling their products from door to door through catalogue. But today this concept of direct marketing has broaden because of the use of telephone and the internet.
According to Pickton and Broderick (2001) Direct Marketing is a marketing system based on individual customer records held on the database. These records are the basic for marketing analysis, planning, implementation of programme and of this activity.
Similarly Fill (2002) defines Direct Marketing as a strategy to create a personal and intermediary free dialogue with customers. This should be a measurable activity and it is very often media based, with a view to creating and sustaining a mutually rewarding relationship.
Direct Marketing is very important method of marketing because it helps the customer to keep informed about the new products developments or to send them the promotional offers which in turn help to increase the sales of the organisation. The various way of Direct Marketing are as under:
1. Telephone Marketing: Telephone marketing is defined as any measurable activity that creates and exploits direct relationship between supplier and customer by the interactive use of telephone ( Roncoroni, 1986). Similarly the AT & T defines it as the marketing of telecommunication technology and direct marketing techniques ( Nash 1984). It has become an important method of marketing today as it helps the company in many ways. It saves a huge amount of costs to the firm. It is a supplement to personal visit, direct mail and other advertising and thus bring a feeling of belongingness to the customers.
2. Direct Mail: Direct mail is a method of communicating a message directly to a particular person, household or firm through postal service. It can be done in the form of letters through post or even in the form of catalogue delivered door to door as the organisation like Reader’s Digest have been doing in UK. Direct Mail is a powerful tool when used properly because it gives you direct access to your target customers and clients. Post office and Royal Mail statistics shows that there is significant increase in the annual volume of direct mail over the last 3 years.
3. Internet: In the same way Internet can be used as a direct marketing tool. Today one can see that lots of emails are sent to the internet users according to their hobbies and interests. This really helps business a lot because it brings a sense of belongingness by the help of personalised message.
4. Direct Face to Face Marketing: This is another form of direct marketing where the marketer talk face to face. This is very effective although expensive because it helps to answer all the questions in the mind of the consumer when asked and hence persuade them to buy the product being offered.
The one advantage that direct marketers have over retailers is the ability to build their relationships with customers over time. Indeed, good marketing is about building trust and personal loyalty in the relationship. It is also a value added marketing techniques because it helps to add value to the products. Some people might be of abnormal size who might not be able to find things that fit them. Yes direct marketing can be used as an effective tool for those.
It is suggested that Allwarm Knitting should go for aggressive direct marketing campaign as it is very effective way to increase the sales and to maintain the loyalty of the customers as well.
Setting Up a Company Website:
It is a good idea to have own website for promoting sells and gaining more customers. Using the web has a huge number of advantages over traditional media. The main advantages are; low cost per view, flexibility, global audience , can create a mass market from a niche, can allow savings in other areas. The web is global, there are millions of users already, you're not just limited to markets where you have established a base. It is easier for customer to compare the products in terms of everything on a website in a very little time. This is why the websites are being popular.
At the moment the company have an email facility only which helps to get the feedback from the customers but it is not fast acting. The website would make it faster. Similarly the email facility can’t help in selling as it requires a dedicated server and also the secret socket layer for the means of payment which can be maintained only through the website. So it is suggested that the company should go for the website. But there are lots of issues to be considered.
The company should do everything possible to show that they are honest and reputable. They shouldn’t sell the email addresses collected and have a privacy statement that they won’t sell the customer information. Those websites that are easy to use, quick to download and updated frequently are liked by the customers. So it is suggested that the graphics should be taken care off as they take time to download. Similarly the company should look into ways to increase search engine results for their site so that it appears in the first few that come up as users tend to get into those ones. Similarly link should be tried to maintained with other websites so that it is easier to increase the number of users.
What should be included on the web site ?
Contents and the features of a website are more important than the graphic design, look or the feel. So the contents and the feature should be decided beforehand. Up to date information should be included in the website because the visitors of a website will want all information about the product or services as fast as possible lacking which they will go for another website. Information on products or services is also needed. One should give as much information as possible, if necessary even the basic level information should be provided.
There are certain questions that are asked more frequently by most of the users. These questions should be included with their answers on the website in a section particularly called as FAQ( Frequently Asked Questions). This is a very good way to win the customers decision in the favour of business.
The website should be properly navigated and linked to its components. The visitors of the website includes customer, supplier, potential customer, investor etc and this is why contact details such as telephone number, fax, and address can be included in the website besides having email address and the response form.
Structure Of Website:
As a well structured essay will aid the reader in the same way a well structured web site will aid visitors, search engines and the maintenance of the web site. A well structured website benefits the users in terms of navigation. Keeping this in mind all the related items should be grouped together that allows users to follow the related items. This will help the site to be included in the search engine like google, yahoo etc, because a section of a site that contains a large amount of information on a given topic will have more importance than a single page on another site on the same topic. Similarly a well thought out structure will make the maintenance easier as well as the new pages will automatically have a place to go within the existing site.
Conclusion:
In the conclusion it can be said that Allwarm knitting shouldn’t think about stopping their brand and going to make private label products. Instead it should start a marketing campaign. It should go for all sorts of marketing besides setting up a database system. The database system might be expensive to start with but it will pay off shortly.
Similarly it is suggested that they should set up a website because internet have no boundaries. It reaches the globe in less than a minute at no extra cost. It is also because today people use internet before making purchasing decisions. By the help of internet they can compare the prices of the substitutes and other leading brands. So it is ideal to set up an own website. This will help the company to recapture the declining share price.
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Bibliography:
- Pickton, D. and Broderick, A. (2001) ‘Integrated marketing Communications’ Financial Times Prentice-Hall, Chapter 28 Direct Marketing Communications.
- Fill, C. (2002) ‘Marketing Communications: Contexts, Strategies and Applications’ Chapter 28 Direct Marketing, Financial Times Prentice-Hall
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Roncoroni, S. (1986) ‘Direct Marketing’, Financial Times, 15th April
- Nash, E.L. (1982) ‘Direct marketing’ McGraw-Hill
- Gerrit Antonides & W. Fred van Raaij, Consumer Behaviour, 1998, England.
- David Jobber and Geoff Lancaster, Selling & Sales Management, 2000, Financial Times, Prentice Hall.
- Harvard Business Review on Brand Management, Harvard Business School Press, 1999, US.
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12. Notes from Andrew Orgill.
